“We paid our Social Security and Medicare taxes; we earned our benefits.” It is that belief among senior citizens that President Obama was pandering to when, in his second inaugural address, he claimed that those programs “strengthen us. They do not make us a nation of takers.”

If Social Security and Medicare both involved people voluntarily financing their own benefits, an argument could be made for seniors’ “earned benefits” view. But they have not. They have redistributed tens of trillions of dollars of wealth to themselves from those younger.

Social Security and Medicare have transferred those trillions because they have been partial Ponzi schemes.

After Social Security’s creation, those in or near retirement got benefits far exceeding their costs (Ida Mae Fuller, the first Social Security recipient, got 462 times what she and her employer together paid in “contributions”). Those benefits in excess of their taxes paid inherently forced future Americans to pick up the tab for the difference. And the program’s almost unthinkable unfunded liabilities are no less a burden on later generations because earlier generations financed some of their own benefits, or because the government has consistently lied that they have paid their own way.

Since its creation, Social Security has been expanded multiple times. Each expansion meant those already retired paid no added taxes, and those near retirement paid more for only a few years. But both groups received increased benefits throughout retirement, increasing the unfunded benefits whose burdens had to be borne by later generations. Thus, each such expansion started another Ponzi cycle benefiting older Americans at others’ expense.

Social Security benefits have been dramatically increased. They doubled between 1950 and 1952. They were raised 15 percent in 1970, 10 percent in 1971, and 20 percent in 1972, in a heated competition to buy the elderly vote. Benefits were tied to a measure that effectively double-counted inflation and even now, benefits are over-indexed to inflation, raising real benefit levels over time.

Disability and dependents’ benefits were added by 1960. Medicare was added in 1966, and benefits have been expanded (e.g., Medicare Part B, only one-quarter funded by recipients, and Part D’s prescription drug benefit, only one-eighth funded by recipients).

The massive expansion of Social Security is evident from the growing tax burden since its $60 per year initial maximum (for employees and employers combined). Tax rates have risen and been applied to more earnings, with Social Security now taking a combined 12.4 percent of earnings up to $113,700 (and Medicare’s 2.9 percent combined rate applies to all earnings, plus a 0.9 percent surtax beyond $200,000 of earnings).
Those multiple Ponzi giveaways to earlier recipients created Social Security’s 13-digit unfunded liability and Medicare’s far larger hole. And despite politicians’ repeated, heated denials, many studies have confirmed the results.

One recent study of lifetime payroll taxes and benefits comes from the Urban Institute. For Medicare, they calculated that (in 2012 dollars) an average-wage-earning male would get $180,000 in benefits, but pay only $61,000 in taxes — “earning” only about one-third of benefits received. A similarly situated female does even better. The cumulative “excess” benefits equal $105 trillion, with net benefits increasing over time.
The Urban Institute’s calculations revealed a different situation for Social Security. An average-earning male who retired in 2010 will receive $277,000 in lifetime benefits, $23,000 less than his lifetime taxes, while for females, their $302,000 in lifetime benefits approximates their lifetime taxes. And things are getting worse. By 2030, that man will be “shorted” 16 cents (10 cents for women) of every lifetime tax dollar paid.
While those results resoundingly reject “we earned it” rhetoric for Medicare, the Social Security results, with new retirees getting less than they paid in, could be spun as “proving” Social Security is not a Ponzi scheme. However, that would be false. The reason is that Medicare is still in its expansion phase, as with Medicare Part D, piling up still bigger future IOUs. However, Social Security has essentially run out of new expansion tricks, although liberal groups are pushing to apply Social Security taxes to far more income as one last means of robbing those younger to delay the day of reckoning. That simply means that we are being forced to start facing the full consequences of the redistribution that was started in 1935. That is, the current bad deal Social Security offers retirees is just the result of the fact that it has been a Ponzi scheme for generations, and someone must get stuck “holding the bag.”

In fact, perhaps the best description of the current Social Security and Medicare situation comes from Henry Hazlitt, long ago, in Economics in One Lesson:

Today is already the tomorrow which the bad economist yesterday urged us to ignore. The long-run consequences of some economic policies may become evident in a few months. Others may not become evident for several years. Still others may not become evident for decades. But in every case those long-run consequences are contained in the policy as surely as the hen was in the egg, the flower in the seed.

Social Security and Medicare’s generational high-jacking has become “the third rail of politics” in large part because seniors want to believe that they paid their own way. But they have not. They have only paid for part of what they have gotten. The rest has indeed been a Ponzi scheme. And as Social Security is already revealing, the future cannot be put off forever, however much wishful thinking is involved. Some are already being forced to confront the exploding pot of IOUs involved, and it will get much worse.
The supposedly “most successful government program in the history of the world,” according to Harry Reid, has turned seniors into serious takers. The fact that some of them are now starting to share the pain caused by those programs does not contradict that fact. It just shows the dark side of the most successful Ponzi scheme in the history of the world.

The truly sad thing about social security is the HUGE PILE OF MONEY seniors would be sitting on if the money put into SS had been invested into bonds, let alone the stock market. There simply wouldn't be any seniors eating pet food to survive, and they wouldn't need health insurance because they could easily pay cash for their care. Personal retirement accounts is where this should have gone, not the pittance they give to seniors now.

Israel has been running a Keynesian, social contract government correctly for years. Paying down debt in good times, being responsible. But when you have people in charge of government that want to see it fail, that is their premise and desire, you can run the country into the ditch and let it rust. You will get something to fill the vacuum and it will have little democratic or even representative capacity. Raise the contribution of the very rich. Seeding money to the general population puts purchasing power to allow those choose in the economy. Otherwise the people who are both closest to the bottom and TOP of the economy will be able to corner the economy.

__________________Even a superstitious man has certain inalienable rights. He has a right to harbor and indulge his imbecilities as long as he pleases. . . He has a right to argue for them as eloquently as he can, in season and out of season. He has a right to teach them to his children. But certainly he has no right to be protected against the free criticism of those who do not hold them. He has no right to demand that they be treated as sacred. He has no right to preach them without challenge." -H.L. Mencken

The truly sad thing about social security is the HUGE PILE OF MONEY seniors would be sitting on if the money put into SS had been invested into bonds, let alone the stock market. There simply wouldn't be any seniors eating pet food to survive, and they wouldn't need health insurance because they could easily pay cash for their care. Personal retirement accounts is where this should have gone, not the pittance they give to seniors now.

This is what conservatives actually believe.

__________________
"Most of us can, as we choose, make of this world either a palace or a prison."
–John Lubbock

The truly sad thing about social security is the HUGE PILE OF MONEY seniors would be sitting on if the money put into SS had been invested into bonds, let alone the stock market. There simply wouldn't be any seniors eating pet food to survive, and they wouldn't need health insurance because they could easily pay cash for their care. Personal retirement accounts is where this should have gone, not the pittance they give to seniors now.

And then they would have lost their money in 2008-9 and they would be living off the taxpayer dime after they lost everything in the stock market.

Horrible idea. Bush tried to do this as his signature piece of legislation. He did the hard sell, town halls etc. The people said **** that shit.

And then they would have lost their money in 2008-9 and they would be living off the taxpayer dime after they lost everything in the stock market.

Horrible idea. Bush tried to do this as his signature piece of legislation. He did the hard sell, town halls etc. The people said **** that shit.

Thats such a crock of shit. I certainly didn't lose everything in my 401k in the market during that period. Did I lose some sure. But dollar cost averaging over your entire working career the country would still be way better off if the Government wasn't handling your social security.

And then they would have lost their money in 2008-9 and they would be living off the taxpayer dime after they lost everything in the stock market.

Horrible idea. Bush tried to do this as his signature piece of legislation. He did the hard sell, town halls etc. The people said **** that shit.

You're so ****ing full of shit that your opinion is becoming irrelevant to not just me.

Myself and plenty of others I talk to didn't lose our money in the crash. Some, yes but still a much better investment than social security ESPECIALLY considering the term length of the investment.

Dude, stop posting this shit for your own reputation's good. People aren't as stupid either you are or you think they are. Why don't you just say "I work for the government and any and all expansion of the government helps out my position and my security. **** ya all, it's me I'm worried about under the thinly veiled propaganda and lies of promoting your well being".

At least we could respect the truth from you for a change.

__________________ “The democracy will cease to exist when you take away from those who are willing to work and give to those who would not” - Thomas Jefferson, 1801.

Thats such a crock of shit. I certainly didn't lose everything in my 401k in the market during that period. Did I lose some sure. But dollar cost averaging over your entire working career the country would still be way better off if the Government wasn't handling your social security.

This last time we came a day away from the whole thing collapsing around us. One day. We were that close.

It's really irrelevant isn't it. Bush tried and got soundly rejected by the public. After the crash in 2008-9 it's not politically feasible to move Social Security into the stock market.

This last time we came a day away from the whole thing collapsing around us. One day. We were that close.

It's really irrelevant isn't it. Bush tried and got soundly rejected by the public. After the crash in 2008-9 it's not politically feasible to move Social Security into the stock market.

Do you really think that if the whole thing collapses that our monetary system and social security is going to survive? I don't know how we can realistically shift the system now, but the whole program was very short sighted from the get go in my opinion.

Just because Bush tried and was unsuccessful doesn't mean that we wouldn't have been better off with the money invested for social security in individual accounts. I would much rather have had Mine and my employers portion in an individual account growing the last 36 years. Instead we have a system that is bound to crash and burn.

We have totally robbed today's youth by such irresponsible fiscal policy, and we keep compounding the problems.

In the opinion of the majority of Americans, yes, that's exactly what it means. Keep Social
Security out of the stock market

I don't know how old you are,if your a baby boomer or a millenial but Let me ask you, would you rather have had the current social security system, or would you rather have had your employers and your contributions invested into a conservative IRA or 401k style system over your working career?

Personally I think the Government does a piss poor job managing money, I am certain that I would have a much more comfortable retirement if I could have had the latter option that I proposed to you.

The younger generation is getting screwed royally. They not only have to support the elderly in Social Security and Medicare. But now we are asking them to cough up a bunch of cash to support the sick and elderly in Obama Care. Throw in the mountain of National debt we are saddling them with and you have to wonder how they will manage.

Name one other Pyramid scheme that has lasted for 80 years. The exponential growth of Pyramid schemes makes them unsustainable for any length of time.

You're conflating the two.

Also, where was all the bitching about young people getting screwed over for the Reagan and Bush tax cuts? Where do you think that money came from?